THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: Here in "The Situation Room" happening now shocking comments about the president of the United States and top officials from the U.S. military commander in Afghanistan and his aides. General Stanley McChrystal summoned to face an angry commander-in-chief.

New information, in a move with huge implications for the hearted gulf region, a federal judge lifts the Obama administration's freeze on deep water oil drilling. We're taking a closer look at the next steps in this legal battle.

And I'll speak with the man picked to oversee BP's $20 billion compensation fund. Can Kenneth Feinberg use what he learned in running the 9/11 victims fund?

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in "The Situation Room."

The man "Rolling Stone" magazine calls the "Runaway General" has been recalled to Washington to face the very angry commander-in-chief. General Stanley McChrystal, the U.S. and NATO commander in Afghanistan is in very hot water right now over a stunning magazine article in which he and his top aides mock top administration officials.

McChrystal has now apologized, but when it comes to the general's fate, the White House now says, all options are on the table and just moments ago, the president took this question from CNN White House correspondent Dan Lothian. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Are you going to fire Mr. McChrystal?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You know, General McChrystal is on his way here and I am going to meet with him. Secretary Gates will be meeting with him as well. I think it's clear that the article in which he and his team appeared showed a poor - showed poor judgment. But I also want to make sure that I talk to him directly before I make any final decisions.

(END VIDEO CLIP)

BLITZER: Let's bring in our White House correspondent Dan Lothian who is in the Cabinet Room for that photo opportunity with the president. Officials there, all the information I'm getting, Dan, they are very angry. General McChrystal and his aides and a lot of the speculation is this general is simply not going to be able to withstand the pressure.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: They really are, Wolf, and I thought it was interesting in the briefing today if anybody was watching. It was the first time that we really Robert Gibbs this angry and also passing along sort of the feelings of the president as well that the president was angry.

He spelled out how the president first found out about it that last night, he was the one who hand delivered over to the private residence, a copy of the article so the president could read it and he described the president as being angry. Reporters were pressing as to what that looks like and he said, you know, if you see it, you know it.

So, yes, there's been a lot of angry here that this article that he even sat down for this interview and then what has come out of the article as well, Wolf.

BLITZER: So tomorrow General McChrystal will come to the White House. He'll meet in the Situation Room with the top advisers including some who he really mocked, he and his aides, in this article like the National Security adviser General James Jones who he says is basically a clown, a relic of 1985 and the vice president of the United States with whom he's disagreed publicly on some strategies as far as the war in Afghanistan is concerned so it's not just the president. Some of these other top advisers are pretty angry as well.

LOTHIAN: That's right and I would love to be inside that room. There will be a larger gathering with all of the other members of the National Security group and also a one on one we're expecting with the president.

And as you point out, yes, he will have to meet with the vice president and as you know, last year, you were alluding to that, last year, there was a little dust up because there was - Mr. McChrystal felt that what the president was - rather the vice president was pushing for, which was a smaller force in Afghanistan that he disagreed with that strategy all together and it was the president who sort of stepped in and had to scold him.

He sort of put in his place and it was thought that this was what behind him in terms of publicly airing any disagreement that they might have. So it will be interesting tomorrow that he's not only faces off with the president, but also as you pointed out some of these other administration officials who either Mr. McChrystal or his aides in Afghanistan said these remarks to about.

BLITZER: Yes, all right. Well, this is a tough article, the "Runaway General." We're going to have a lot more on this coming up. Dan, thanks very much. Stand by.

There's other major news we're following in the oil crisis right now. A federal judge today lifted the administration's six-month freeze on deep water drilling in the Gulf of Mexico siding with those who say they're being badly hurt by the ban.

The White House has brought in an immediate appeal arguing the moratorium is necessary to protect the workers and the environment during a safety review of the deep water horizon explosion. Opponents that maybe tied to the drilling industry called the freeze economically devastating to the Gulf region.

Let's bring in our Senior Legal analyst, Jeffrey Toobin. The White House immediately said they will appeal this decision, Jeff. But walk us through what happens now in the immediate days as this appeal goes forward.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Wolf, you know, this is really an extraordinary decision by Judge Feldman in New Orleans because here you have the central domestic priority of the Obama administration.

They assemble the best experts in the country. They spent 30 days assembling recommendations and then the judge says what they suggested in terms of this moratorium is arbitrary, is capricious, is irrational.

I mean, it's an incredible revoke to the Obama administration and you can see why they want to appeal. But the status quo now is there is an injunction against the moratorium. So at least in the short term I think these rig operators would be within their rights to start drilling today.

BLITZER: So they get to resume the drilling if they want to, but how long would it normally take for the Fifth Circuit to go ahead and decide whether or not the judge was right or wrong?

TOOBIN: Well, this case has moved at warp speed. This was just argued a couple of days ago. The judge said he'd issue his order today. So the Fifth Circuit could act tomorrow. That's how quickly these sorts of injunction stay. These sorts of decisions can go. I don't know that the Fifth Circuit will, but when you have an issue of this magnitude, the courts can work very quickly.

There's more potentially explosive information that wasn't included in that article about General McChrystal and the editor of "Rolling Stone" magazine is here. He'll join me. We'll discuss what else was included in those conversations that didn't actually make print. We're going to want to hear and see this interview.

Also oil victims in Florida are saying they're not getting their money. So CNN went right to the BP executives to try to get answers. You're going to find what happened later.

Republican voters in South Carolina could make history today. The latest on the primary runoffs. Stay with us. You're in "The Situation Room."

(COMMERCIAL BREAK)

BLITZER: All right, back to Jack Cafferty for the Cafferty File, Jack.

JACK CAFFERTY: Wolf, if life isn't difficult enough for millions of unemployed Americans? Check this out. Companies are increasingly interested in hiring only applicants who already have a job.

Cnnmoney.com reports that some job postings have restrictions like unemployed candidates will not be considered or must be currently employed. In some cases, the companies have removed these restrictions from their job postings but only after media outlets like CNN Money pressed them on the issue.

Other employers may not spell out in the job listing that they won't consider somebody who is unemployed, but it's pretty much given that they rule these candidates out immediately.

It's rather shocking that with unemployment at almost 10 percent, there are some companies that are outright shutting the door on so many Americans. One New Jersey human resources consultant says that when she suggests somebody for an opening, often the first thing that recruiters ask is if the person is currently employed, does he have a job?

If the answer is no, the candidate usually doesn't get an interview. She says employers sometimes think the unemployed had been laid off for performance issues, but that's actually a myth in a time of 10 percent unemployment.

Lot of people has lost their jobs, but absolutely no fault of their own. It's called downsizing. Other suggests that employers are ruling out the unemployed because they are overwhelmed with applicants. In other words, reading out the unemployed is simply a short cut for them.

The sad part about all of this, none of it is against the law. Here's the question, what's in store for the unemployed if some companies are only interested in applicants who already have jobs?

Go to cnn.com/caffertyfile, post a comment on my blog.

BLITZER: All right, Jack. Thank you. Jack Cafferty with the "Cafferty File." The U.S. commander in Afghanistan is called back to Washington by the commander-in-chief. It follows the sensational "Rolling Stone" article in which General Stanley McChrystal and his aides mock top administration officials.

Just a short while ago, I spoke via satellite phone with the author of the article, Michael Hastings who's now in Kandahar. I asked him about the sub-headline, which says and I'm quoting, wimps in the White House are General McChrystal's, quote, "real enemy."

Hastings says the general and his aides mean the civilians involved in shaping Afghan policy. He was referring specifically to the special U.S. Representative Richard Holbrooke, the National Security Adviser, the retired Marine Corps Commandant General James Jones, the Vice President Joe Biden and the Ambassador, U.S. Ambassador to Afghanistan, also Retired U.S. General Karl Eikenberry.

Joining now is the executive editor of "Rolling Stone" magazine, Eric Bates. Eric, thanks very much for coming in. This is a powerful article and I recommend it to our viewers to read it, "The Runaway General."

But you just told huffingtonpost.com, there's a lot of stuff that he had - the author of this article that wasn't included. Give us some details if you can.

ERIC BATES, EXECUTIVE DIRECTOR, ROLLING STONE: Well, I actually told the "Huffington Post" that if you're going to look at what's not in the story, but there's often good reasons that things aren't in the story.

There may be wrong. There may be at (inaudible). There may be boring so we're going to take a look at what we cut out and see if any of it is worth posting online and be doing that in the next couple of days.

BLITZER: So there might be other stuff that was either on the record or on background, not off the record that you might be able to share with your readers online that would provide some more information. I guess, you must be stunned by the reaction, but maybe not.

BATES: Well, even as a reader, when Michael Hastings, the reporter was telling me what he was getting and when I read the first draft. You can't read this and not know that what's in it is explosive. So certainly we had a feeling early on that this was going to create (inaudible) but how quickly it exploded and how big took me by surprise.

BLITZER: Walk us through how Michael Hastings and I spoke with him on the phone. He's obviously a talented young journalist. He spent about a month in Afghanistan, maybe longer. He's been out in the region for a while. Walk us through how he got this extraordinary access to General McChrystal and his aides.

BATES: Sure, Michael has been reporting on both wars Iraq and Afghanistan for several years. He had about six weeks to two months on this story. A lot of that with the general and his team and flew in to meet them in Paris where McChrystal had gone to try and convince our French allies to stay the course.

And really from the first hours that he arrived, he started hearing a lot of this trash talk from the general and his team about Vice President Biden and other in the administration so it really began right away.

He wind up spending more time than expected with the general because the trip coincided with the volcano that erupted in Iceland so we wind up travelling with the general to Berlin and then on to Kabul and eventually on the Kandejar with the general met with some of his own troops who were unhappy with the way the war is progressing.

BLITZER: And he was invited to join the general on the military plane that took him to all these locations?

BATES: In some cases, he flew separately. In some cases, he flew with General McChrystal or his team.

BLITZER: Does "Rolling Stone" magazine usually get this kind of access to a military commander?

BATES: I think this is really unprecedented access at this level, but I have say we've always gotten very good access from the military because we have a very young readership and the military wants to reach those readers and in press upon them their point of view.

And if you read the story, I think what's striking about it is what a complete assessment it really is of how General McChrystal and his team view the war and view the world.

BLITZER: You know, anybody who reads this article and as I said I read this morning comes away thinking this whole war right now looks dire. It doesn't look very promising. The U.S. military forces, the soldiers, the Marines on the ground, they really complain bitterly that they're forced by General McChrystal to fight with one arm tied behind their back to that there won't be civilian Afghan casualties. Is that the conclusion you've drawn from this reporting by Michael?

BATES: Absolutely, and that what's - where Michael is hearing even now from troops on the ground in Kandejar where he's reporting another story. That they feel that way and that they're really glad that their views are getting out.

I think what's being missed in some of the discussion of in subordination is legitimate as in AB is that there's a larger issue here, which is that counter insurgency, the strategy that General McChrystal is promoting relies on a very close intertwining of the military and diplomatic arms of the war.

And right now, those arms are severely divided. It's difficult to imagine how the United States can win in Afghanistan even if everyone's on the same page. But if they are on the same page, it's hard to conclude that we can do anything but lose.

BLITZER: Those of us who have been reading "Rolling Stone" magazine for decades, now know you guys have done some great journalism. I suspect this is one of those stories that's going to generate a lot more commotion than usual even with some of the other excellent pieces you've published over years.

Eric Bates, thanks very much.

BATES: Thank you.

BLITZER: We look forward to seeing what you get online, what else wasn't published that you want to share with us. Let us know. Thank you.

BATES: You're welcome.

BLITZER: Some people along the Gulf Coast say they're not getting their money they need to fight the oil spill. We're going to tell you who they say is to blame and the man who headed up the fund to compensate victims of the 9/11 tragedy has now been tap to administer claims from this oil spill. I'll ask him to compare the two jobs, what's going on. Stick around. You're in "The Situation Room."

(COMMERCIAL BREAK)

BLITZER: Some Florida counties on the front lines of the oil fight say they are not getting the money they need to defend themselves and they're blaming BP for that.

CNN Dave Mattingly is joining us for that from Destin, Florida. David, what are you hearing?

DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT: Wolf, across the panhandle we are seeing the county officials who are trying to stay out in front of this oil spill, but they say one problem, BP is standing in their way.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): Booms, barges and bank accounts, and that is all panhandle communities have standing between them and the oil, and that's the problem.

DINO VILLANI, PUBLIC SAFETY DIRECTOR: We've got our permits. We've got everything signed off and ready to go, and the holdup now is BP. We have no money to do the protective measures.

MATTINGLY (on camera): Counties ambitious plans to protect this vital waterway called the Destin pass needs $2.8 million right now to be fully operational then $2.5 million a month to keep going. County officials tell me they've told BP for three weeks they need the money, but so far, no check.

Excuse me, sir, are you with BP?

UNIDENTIFIED MALE: Pardon me?

MATTINGLY: Are you with BP?

UNIDENTIFIED MALE: Yes, I am.

MATTINGLY: Jay Prothro (ph) is a BP executive coordinating the community support in the panhandle. Are they going to get their check and how soon? The oil is here, and they have the plan in place, they need the money. What happens?

JAY PROTHRO, BP CLAIMS EXECUTIVE: I can't speak to how soon they're going to get it. What I can tell you is there is a process in place and they're working to get that money there.

MATTINGLY: This process doesn't seem to be keeping up with the oil.

PROTHRO: I understand what you're saying and you're right. The whole process is new and everybody is learning as they go and trying to figure out what makes the most sense and that's what they're working on.

MATTINGLY (voice-over): What doesn't make sense to local officials is why BP is taking so long. Bay County says it needs $3 million, and Escambia County has already filed claims for $9.1 million, but again no BP money and no BP answers.

(on camera): How hard is it to write the check?

PROTHRO: Well, like I say, they have set out guidelines on how to get the reimbursement and the county has filed my understanding and I have to run some traps to figure out where it is in the process and see what the answer is to that. I just can't tell you right now.

MATTINGLY (voice-over): Frustrated and already feeling the bite of the tax revenues lost with every tourist who cancels a vacation. Okaloosa County officials took their complaints to Senator Bill Nelson.

(on camera): So is this county going to get its money in time to get this protection in place?

SENATOR BILL NELSON, (D) FLORIDA: Yes, this county and a lot of these other little counties, they just simply don't have the financial wherewithal to be paying all of these bills. They have to have some relief, so yes, they will get the money.

MATTINGLY (voice-over): But the big questions of how soon and how much can only be answered by BP.

(END VIDEOTAPE)

MATTINGLY: Florida Governor Charlie Crist also weighing in here, and he has asked BP and sending them a letter saying that we want to know who has asked for money, and how much and how much BP is paying them. And who is getting paid.

Well, so far, that shows that the state of Florida is now taking notice of what is happening to the county officials here trying to get out in front of the money logjam - Wolf.

BLITZER: Thank you, David Mattingly on the scene for us in Destin, Florida.

This is just coming in from Jamaica here into "The Situation Room." Police there are now saying they have arrested the alleged drug lord Christopher Coke. The hunt for Coke set off a street fighting as you will recall in Kingston between his supporters and the government security forces. We will get more for you on this major arrest.

He distributed money to the 9/11 victims and now he is overseeing BP's $20 billion claims fund. I will ask Ken Feinberg what lessons he has learned. Plus after stunning remarks about the president and the officials, will the Afghan U.S. commander General Stanley McChrystal be forced to resign?

And after a sensational campaign, South Carolina's Republican primary runoff is now in the hands of voters, and could they make history today?

(COMMERCIAL BREAK)

BLITZER: Under pressure from the Obama administration, BP established a $20 billion compensation fund for victims of the oil disaster. The man picked to oversee it will be able to draw an experience he gained after 9/11. CNN's Mary Snow has been looking into that.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT (voice-over): On the front lines of the frustration in the gulf, Kenneth Feinberg is getting an earful.

UNIDENTIFIED FEMALE: Our fishermen are out there cleaning up toxic wastes in the Gulf of Mexico, and the heat and the dire situations and they have in fact turned around and took --

UNIDENTIFIED MALE: Any other questions?

SNOW: That exchange in Louisiana last week came two days after Feinberg was tapped to be the independent administrator of a $20 billion claim fund to be paid by BP.

Before Feinberg left Louisiana, he gave his contact information to the woman pressing for answers. The way that Feinberg deals with people has changed says Charles Wolf. Wolf's wife Catherine was killed in the World Trade Center and Feinberg was appointed to oversee a fund for 9/11 victims and their families.

CHARLES WOLF, FOUNDER, FIX THE FUND: How I viewed him initially was cold-hearted and almost uncaring and how I would see him now, I would say a very, very compassionate person who understands what this money means to people.

SNOW: Wolf was among 5,300 recipients of the $7 billion government fund following 9/11 and brought Feinberg face-to-face with grieving families.

UNIDENTIFIED MALE: Why is there any different on a value of life from a 22-year-old to a 60-year-old man.

SNOW: In the end, Feinberg won over critics. Now, he is drawing on the experience to determine how to compensate everyone from out of work fishermen to businesses hurt by tourism. For starters, he is distributing emergency money. The difficulty comes with long-term payouts to businesses hurt indirectly. There, Feinberg may also draw on past experience and turn to state boards.

KENNETH FEINBERG, OIL CLAIMS ADMINISTRATOR: If the person in the restaurant thinks they are losing business because of the spill, would the Louisiana courts recognize that tort? If so, we should. If not, we shouldn't. It is one possible way it worked very well in the 9/11 victim compensation fund and maybe the best way to deal with it here.

SNOW: Legal experts see a challenge in the fact that there's no sealing on the $20 billion fund paid out by BP.

RICHARD NAGAREDA, VANDERBILT UNIVERSITY: That does create a risk because then it creates an incentive for claimants to basically run through the existing fund on the notion that more money will be added to the pot.

SNOW: Mary Snow, CNN, New York.

(END VIDEOTAPE)

BLITZER: And joining us now from Mobile, Alabama, is Kenneth Feinberg. He is the administrator of the independent claims facility that has risen out of this disaster in the Gulf of Mexico. Ken Feinberg, thanks very much for joining us.

KENNETH FEINBERG, OIL CLAIMS ADMINISTRATOR: Thank you.

BLITZER: There has been a little confusion about lawsuits down the road. If people accept payment from BP out of the initial $20 billion compensation fund, do they forego their ability down the road to file lawsuits against BP?

FEINBERG: First of all, it is not BP that is paying these claims, it is the independent administrator, myself.

BLITZER: But the money comes from BP.

FEINBERG: BP and the administrator. That is correct, out of the escrow account. Now, any emergency payments that are paid in the next few weeks are paid on an emergency basis to any eligible claimant, and those claimants do not forego their right to litigate down the road. If at some point in the next 60 or 90 days, they are offered a lump sum final settlement at that point, they will voluntarily decide whether to litigate or to take the money and refuse to litigate, just like the 9/11 fund, Wolf, that you know so much about.

BLITZER: Because you administered those funds as well. If people accepted a lump sum for the loss, they then decided they forego their right to go ahead and file separate lawsuits to try to collect more money, and that is the same basically with the exception of the next 30 or 60 or 90 days during this emergency period. Down the road, they won't be able to file lawsuits if they get a lump sum.

FEINBERG: That is right. But don't forget as you know better than most, 97 percent of all of the eligible death claims in 9/11 came into the fund, only 94 people, 94, decided to sue. I hope we have that same ratio or better with this fund here in the gulf.

BLITZER: Because you are hoping these folks won't file lawsuits because the lawyers will make money, and with all due respect to lawyers, I know you are a lawyer yourself and it could drag on for years and years. You think that these people would be better taking the money and then forgetting about the lawsuits.

FEINBERG: That is right. And it is purely voluntary. The emergency payments that we are paying out right now, Governor Riley urged me to get the money out quickly here in Alabama. Those emergency payments do not require that anybody elect not to sue. That will be down the road.

BLITZER: The long-term compensation, the lump sums as you call them down the road, how will that be determined? Let's say there is a shrimper, there's a fisherman whose business is going to die for the next several decades until this thing is cleaned up, will you provide the money over these years and years that he or she could have made if the business had been prosperous without this disaster?

FEINBERG: Under your hypothetical the answer is yes. The shrimper will come into the claim fund, this independent facility. First we will give that shrimper emergency payments to get through the next 30, 60 days without any obligation. The money is theirs if it is corroborated and it's an eligible claim under your hypothetical. Then we will sit with the shrimper, we'll come up with a lump sum payment and determine the long term destruction of his business or her business, cut a check. If the shrimper wants the check, they will relinquish the right to sue. Here is the check. If they don't, they can go and litigate as long as they'd like.

BLITZER: We know that the 9/11 compensation work lasted a few years. You resolved the whole thing and you got really good grades for that. How long do you think that this process is going to go on? Months, years? What is your estimate before the money dries up?

FEINBERG: Well, a couple of things. First of all, it would be nice to know that the oil stopped flowing. It is a little hard to have a cutoff date if there's still an ongoing problem in the gulf. I would hope that we would be able to resolve these claims roughly in the same time period as the 9/11 fund, three years, maybe four years, and that remains to be seen. Don't forget if the $20 billion is insufficient, maybe it won't be, but if it is, both the administration and BP have agreed that BP will replenish the fund as needed in order to pay all of the eligible claims.

BLITZER: So it could be a lot more than $20 billion.

FEINBERG: Theoretically, it could be, but that remains to be seen.

BLITZER: Depending upon how much of a demand there is, how many claims there are. Do you have the staff right now, Ken Feinberg, to get this enormous job done? FEINBERG: No. We will want to build -- we want to build up a greater staff. Let me say, Wolf, BP deserves a good deal of credit here for setting up this original claims process. I'm not like -- with 9/11, I am not starting from scratch. BP has done a pretty good job across the gulf in talking to the various governors in the gulf, they give BP some credit for what has been done. But I think that we have to supplement that staff with my own people, independent, not beholding to anybody to build up that process and get these claims resolved quicker and more effectively than have been to date.

BLITZER: All right. Ken Feinberg, good luck. You have an enormous challenge ahead of you, and we wish you only, only success.

FEINBERG: Thanks, Wolf. Thanks very, very much.

BLITZER: Summoned by the commander in chief, General Stanley McChrystal is called home to explain some stunning remarks made in a magazine interview. Will he resign?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Our top story, the U.S. commander in Afghanistan General Stanley McChrystal has been called back to Washington after he and his staff made some remarks in a "Rolling Stone" article that mocked top officials. McChrystal has now apologized but the white house says President Obama is angry and that all options are on the table regarding the general's fate. The president says he wants to meet with General McChrystal tomorrow before deciding what to do. Let's talk about this with Fran Townsend, our national security contributor, Gloria Borger, our senior political analyst and John King, the host of "JOHN KING USA" that comes up right at the top of the hour, John King. What are you hearing John from your sources about General McChrystal?

JOHN KING, CNN ANCHOR: I am told Wolf by a very reliable national security source that he is coming home prepared to resign, to tell the president that if you have lost confidence in me, sir I will give you my resignation immediately. The hope among most of the senior brass at the Pentagon Wolf and you covered the building a long time is that it won't come to that, that the president will upgrade General McChrystal and come to the conclusion hat as mad as they are at the white house and at the pentagon, that he is the best person to carry out this strategy which is struggling to say the least at the moment, and he will be upgraded and sent back perhaps with his head down a little bit, but sent back to complete the mission.

BLITZER: Because any old military professional given these circumstances would certainly offer his resignation.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes absolutely, in talking to a couple of senior administration officials, I think the real concern there is if you have someone who is trying to muddy the water right now. The president in his remarks today said no ambiguity. And what he wants to talk to General McChrystal about is do we have an issue here, by the way, this was your policy that you adopted, I agreed with it, and this is the policy that I want carried out so this tension that we see in these comments, this derision, is that emblematic of a larger problem? The president wants to make sure that he doesn't have that with his general in the field.

BLITZER: You worked with President Bush in the white house. How would he have reacted if a top general said these kinds of things, his immediate advisers, said these kinds of things about the vice president, the national security adviser and the special U.S. representative to Afghanistan and Pakistan and the U.S. ambassador to Afghanistan, and what do you think President Bush would have done?

FRAN TOWNSEND, CNN NATIONAL SECURITY CONSULTANT: Look let's be real clear, regardless of who the president is, it is unprofessional and unbecoming of an officer as senior as General McChrystal. I think McChrystal himself is embarrassed by it. I think that is why you've seen him issue a very strong apology, and I think tomorrow he needs to begin his session in the oval office reiterating that apology. I do expect, John is right, I think he will offer his resignation, very consistent with who Stan McChrystal is but I do think given where we are in the effort in Afghanistan, we are at a tenuous point. It is clear that the strategy is struggling. Now is not the time and as angry as the president and the white house folks are, I don't think they are going to accept that representation.

BLITZER: Because if you read this article by Michael Hastings in "Rolling Stone" magazine, let me go back to you John, it paints a picture of a quagmire, a no-win situation in Afghanistan right now and similar to Vietnam.

KING: And General McChrystal has had to deal with flack from the troops in the sense that you are sending him more troops but telling him to use less lethal force because of the concerns of the civilian casualties and they are struggling that, and some of the troops are not there as fast as they would like, getting the quasi government to come around both from a governance standpoint and a security training standpoint, not as fast as they would like. So the question that the president faces is number one, will you be able to keep your deadline to start bringing them home next year. Many people question whether that, but the more immediate question is that you have a general who everybody knows he is brash, and he's cocky. That's part of his charm. That's also part of what gets you into messes like this. Does he just have a big ego and in this case a big mouth or does he have a big problem with the president's team that he has to work closely with? That's the question facing the president.

BLITZER: Because there is a history of tension between his views, General McChrystal and Vice President Biden's views on what to do in Afghanistan.

BORGER: Right. When this decision making process was going on about whose views to adopt, you'll remember that McChrystal was once taken to the woodshed by the president because he said that Vice President Biden's plan would be chaos. So this will be the second time that he's going to be having some problems with this president and again what was emphasized to me is that the president is going to say to him, look are you on board with this policy? You were on board with this policy when we established it. I need to make sure that you continue to own this policy because it is mine now.

BLITZER: Because if you read the article also, the headline "Runaway General" and then it talks about General McChrystal believes that the real enemies in this war are what we calls at least what the article describes him as believing the wimps in the white house which plays into Republican criticism of Democrats all of the years that Democrats are weak on national security.

TOWNSEND: That is right, Wolf. But to be fair now, whenever you have got commanders in the field, their view of policy oversight and folks in Washington and questions from Washington are greeted with derision regardless of whether they are Democrats or Republicans asking them. These are guys who are on the front lines. They're losing men and women everyday, so they really don't want to be bothered with a lot of questions regardless of who is in the white house, but to Gloria's point, McChrystal's main objective tomorrow is going to have to be to convince this president and this white house that he's going to put his head down, keep his mouth shut and get the job done on the timeline that the president says.

BLITZER: And we will see if he has the confidence in the commander in chief. That will be a big story tomorrow. Thanks guys very much. John King will have a lot more coming up at the top of the hour on this very important story.

Republicans in South Carolina could be on the verge of nominating their first female candidate for governor. We will update you on today's primary runoff. A lot more coming up right here on THE SITUATION ROOM.

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BLITZER: Republicans of South Carolina could be on the verge of choosing their first female candidate for governor. The polls are about to close. CNN's Jim Acosta is covering the primary runoff race tonight. I guess everyone simply assumes Nikki Haley has it in the bag.

JIM ACOSTA, CNN CORRESPONDENT: That's right Wolf. That is the expectation. This is South Carolina though so anything can happen but Nikki Haley who is a state representative here, who was a virtual unknown on the national stage six months ago is on the verge of shattering a very big glass ceiling in this state. She is expected to win the runoff in the Republican nomination battle in this race for governor down here in South Carolina. This is despite the fact that she has been the subject of accusations of marital infidelity, accusations she's denied, her religious faith has been questioned and she's even been the subject of ethnic slurs, but through it all, she has endured all of those attacks and the conventional wisdom down here in South Carolina is that those attacks backfired. Earlier today, Nikki Haley cast her own ballot in this race, and she was asked with her children in tow whether or not people are voting for her because they feel sorry for her. NIKKI HALEY (R), SOUTH CAROLINA GOV. CANDIDATE: Well, people are a whole lot smarter than that. I have never known them to get out and vote, because they feel story for anybody. They get out and vote because they get mad and I appreciate that. They wanted us to be talking about issues. They wanted us talking about jobs and the economy. They didn't want negative attacks and they responded that way.

ACOSTA: Representative Haley is not only favored to beat her Republican challenger in this runoff Gresham Barrett who is a sitting Republican congressman. She's also favored to go on and defeat the Democratic challenger in this race Vincent Sheheen who is also a state lawmaker here in South Carolina, but more than anything, Wolf, given all the problems that they've had down here with their current governor Mark Sanford who had a embarrassing scandal of his own the thing that we heard time and time again of people here in Columbia, South Carolina is that they want to move on and see these scandals move on.

BLITZER: Well, it will take a while in South Carolina. There's been several of them we have seen lately. There's already I take it some speculation about what she might be doing further down the road?

ACOSTA: That is right. If you can believe this, Wolf, she has not been elected governor yet, and yet she was asked out on the campaign trail today, whether or not she was interested in running for president or vice president in 2012, and that is just an indication of how she has become a rising star not only in the Republican Party, but in the tea party movement. She has had the endorsements down here of Sarah Palin, Mitt Romney, Jenny Sanford, the ex-governor Mark Sanford's wife, and so yes the Republicans are happy she is doing well down here. They are not only looking at that race, they're also looking at a Congressional race going on down here. Tim Scott, an African American Republican, is poised to win his race. A Republican runoff against Strom Thurmond's son for the first Congressional district in South Carolina, and that would also be a big headline down here in South Carolina, Wolf.

BLITZER: We will watch all of the races together. Thank you very much, Jim Acosta.

Jack Cafferty is asking what is in store for the unemployed if some companies are only interested in applicants who already have jobs.

And the top U.S. military commander in Afghanistan is in very hot water over comments in that "Rolling Stone" magazine. Jeanne Moos will take a most unusual look.

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BLITZER: Let's check back with Jack for the Cafferty file. Jack?

JACK CAFFERTY, CNN CORRESPONDENT: What was in store for the unemployed in this country if some companies are only interested in applicants who already have jobs?

Ann writes from Charleston, South Carolina, "I personally know of a company with this policy. Their excuse is they want to see the potential employee in action before hiring them. I think it's an area in which the media can do some good, make this unfair practice known to the public."

Mark in Boston writes, "All other things being equal, which doctor would you want performing your open heart surgery? The one who did the operation yesterday or one that hasn't done one in two years? This is the disingenuous perspective of most companies. These are the same misguided, short-term, stock price driven companies that figure they can save 25 percent by shipping jobs to Mexico and China only to lose 20 percent of their business due to workmanship and poor quality. The net effect is far greater than the five percent. Ask any state municipality that has lost all that tax revenue for the last two decades and has been paying out more unemployment insurance than they ever have in their history."

Nancy in Tennessee says, "If companies will only hire people who already have a job, then there are a lot of people who are doomed. The government should pass some new equal opportunity laws that protect people from being discriminated against because they lost their job due to downsizing."

Jackson writes, in Georgia, "Speaking from experience, there are a lot of bad workers out there who have jobs and there are a lot of good workers out there unemployed. From a purely pragmatic point of view, wouldn't it be better to court the unemployed who would work for less money?"

And Caroline writes, "What happens if the HR department automatically throws out the resume that indicates that a candidate is unemployed? That person stays unemployed. I've been unemployed for two years. No one will even look at me. I noted directly on the resume that I lost my job because the office was closed. It doesn't matter to HR. I'm still deemed unemployed."

If you want to read more on this, there are some sad stories out there, go to my blog at CNN.com/Caffertyfile. Wolf?

BLITZER: See you tomorrow Jack. Thank you.

Jeanne Moos is next.

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BLITZER: He's being called the run away general. Jeanne Moos takes a look.

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JEANNE MOOS, CNN CORRESPONDENT: The cover story may say Lady Gaga tells all but down below her thigh it's what General McChrystal has said that has everyone going gaga.

UNIDENTIFIED FEMALE: The top U.S. commander in Afghanistan summoned to the white house.

UNIDENTIFIED FEMALE: The white house yanking General Stanley McChrystal back to Washington.

PRES. BARACK OBAMA (D), UNITED STATES: General McChrystal is on his way here.

UNIDENTIFIED FEMALE: Let's all take a deep breath.

MOOS: It wasn't just what General McChrystal said. It was the general's staff insulting high-ranking officials.

UNIDENTIFIED MALE: I've never hear the vice president of the United States referred to as vice president bite me.

MOOS: But exactly how big does the white house consider the general's mistake to be?

ROBERT GIBBS: An enormous mistake, what an enormous mistake this was. There has clearly been an enormous mistake in judgment.

MOOS: A few good men just got themselves in a load of trouble. In the wake if the Rolling Stone piece, a cartoonist drew the general himself as a rolling stone headed downhill. General McChrystal faces being branded.

What will be the general's fate? If only we had him a crystal ball.

UNIDENTIFIED MALE: He must be ripped over this.

MOOS: But the so-called run away general wasn't the only thing annoying the president on Tuesday.

OBAMA: Get out of here. You see me grab one of those before.

MOOS: The question is, how hard will he swat the general at the showdown in THE SITUATION ROOM? Wouldn't you love to be a fly on the wall at that meeting?